Technology trends for the factoring industry

As a factoring provider, you already know how much is happening in the industry. Both customer needs and technological developments are advancing faster than ever. To avoid being left behind, it’s important to understand how technology affects all changes. At the same time, it’s important to recognise the new opportunities it brings.

As a result, we’ve taken a look at the latest technology trends in the factoring industry. We hope it will give you the insights you need to invest in a technology that supports your business development. Especially when it comes to how SaaS, integrations, scalability and AI affect your factoring company in general, and business efficiency in particular.

Technology trend: SaaS and scalability

When a factoring company is faced with choosing a factoring system, there are a few options to choose from. For example, the system can be built locally on-premise. This provides control, but building in-house also requires a lot of time and resources. For example, a dedicated development team is required. At the same time, it can be a challenge to achieve the right results when building yourself. An alternative is to outsource the work and let someone else build the system. The result is more likely to be good when a professional does the work, although it is still a resource-intensive project. In both cases, it also results in a local factoring system with limited scalability.

Another option is to choose a SaaS model. Software as a Service (SaaS) is becoming an increasingly attractive solution for both large and start-up factoring companies. This is mainly because a cloud-based solution offers great flexibility as the company only pays for the services they need and use. A SaaS solution is also quick to get started as it comes with ready-made features. At the same time, it is easy to add more services and features as the business evolves and needs change. This makes it a solution that is neither too limiting nor too resource intensive.

When a factoring company does not have to build, test and operate their factoring system internally, they also get a more flexible solution overall. Moreover, such a solution can be customised as the business evolves, new technologies are introduced or customer needs change. This is also why one of the main technology trends right now is to move from rigid in-house solutions to utilising flexible, scalable SaaS platforms that can easily be shaped to meet new needs and conditions.

Technology trend: AI and machine learning

Today, it’s impossible to talk technology development without bringing up AI. While it is a revolutionary technology that will impact factoring, it is also important to remember that it is still early days. Right now, the discussion is mainly about what is possible to do. But with the lightning-fast development we see today, the step from idea to solid solution is very short.

Factoring and AI for automation and data analysis

When it comes to factoring, we see that AI will be useful mainly in two areas: automation and data analysis. Today, companies are competing to automate as many processes as possible to streamline their operations and spend more time on more value-creating tasks. Such as customer care, market analysis and business development. In factoring, there are many processes that are automated to make them fast, error-free and cost-effective.

Machine learning is a part of AI that is based on data analysis and pattern recognition. If there is one thing that AI is good at, it is processing large amounts of data to find patterns. If we apply this ability to factoring, we can see several possibilities, for example:

Analyse financial data to assess the creditworthiness and risk profile of potential customers.

– Evaluate invoices and assess risks to suggest appropriate funding levels for different transactions.

– Flag suspicious activities and fraud attempts by analysing real-time transaction data.

– Streamline and improve customer relationships by analysing communication patterns and customer feedback. Analysing customer communication and transaction history can also highlight more upsell opportunities.

Despite all the possibilities, it can be easy to feel lost in the AI development. What technology is developed and available? What technology does my factoring company need? The key to making AI a successful part of factoring systems therefore probably lies in making the process of adding new features as simple as possible. This means that this trend will probably be closely linked to scalable SaaS solutions that are easier to develop with new features without the user having to do the heavy lifting.

Technology trend: integration via APIs

Another area of technology where a lot is happening is in APIs. API (Application Program Interface) is nothing new, but a technology that has long helped computers talk to each other. APIs are also becoming more common today, as more and more people use cloud solutions and SaaS. When your system support becomes cloud-based, you have new opportunities to integrate with other systems compared to an on-premise system.

What’s driving the use of APIs right now is that more and more third-party vendors are providing both software and simple workflows, helping to make it easier to connect APIs. This makes scalable platforms and SaaS solutions even more flexible and powerful. In the past, customising a factoring system required resources and technical expertise, but with APIs for easy integration, it’s now possible to quickly add the support needed to increase efficiency or meet new customer needs. In short, it becomes much easier to improve business processes.

A factoring platform that can meet both technological developments and new business needs

To summarise these technology trends in factoring, we see that scalable and easily adaptable solutions will be required. Instead of the traditional on-premise systems, the trend is towards SaaS solutions and component-based architectures that are highly flexible and can be customised to each company’s own needs and processes.

So, what do you need in order for your factoring to keep up with technological developments? It depends, of course, on your processes and how you plan to grow, but to avoid being locked into a solution that can’t evolve with you, you need to consider features such as:

API integration capabilities. Then you can easily develop the system in line with your new needs. For example, with AI, CCM or security solutions.

– A high degree of automation that allows you to automate your processes and helps provide more efficiency and better control.

– Flexibility to adapt the platform to your needs and different types of factoring products. If you decide to start offering invoice discounting or reverse factoring, those ambitions should not depend on whether your factoring solution can handle them or not.

– User-friendliness. Not only for your benefit to work more efficiently, but also for your customers. For example, a client portal or dashboard that allows them to get an overview of their invoices and reports, etc. This contributes to a better customer service while relieving your customer service.

Would you like to know more about how you can optimise your processes, work more efficiently and choose a flexible factoring solution that can be adapted to both your business and the development of digital technology? Contact us and we will help you!